Evidence of meeting #53 for Government Operations and Estimates in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was post.
A video is available from Parliament.
President, Pitney Bowes Canada
Absolutely. If we go to an alternate model that's going to diminish the value of marketing mail and the predictability of it getting to the client at the right time, then the marketers gets their ROIs.
NDP
Erin Weir NDP Regina—Lewvan, SK
Some testimony we heard in Yellowknife was about the possibility of Canada Post generating more revenue through commemorative products and catering to the stamp collecting hobby. There was some talk about a huge stamp collecting convention in New York. Folks from Ernst & Young weren't particularly enamoured with this idea, but I wonder, given Pitney Bowes' international presence, if you have any perspective on what other post offices have done in this area and whether there is the possibility of bringing these international conventions to Canada.
President, Pitney Bowes Canada
I certainly like the romance of the stamp collecting. I'm not sure of the economic model of it. We're in the postage meter business, which is almost anti-stamp. I certainly like the commemorative stamps. They recently did one for the NHL with the top forwards. If it's a money-making venture, I think Canada Post should pursue it with vigour, but I don't know what the economics are of that.
NDP
Erin Weir NDP Regina—Lewvan, SK
Yes.
Purolator is currently about 90% owned by Canada Post. Do you think there's a case to combine the two entities completely?
Chairman of the Board, Purolator Courier Ltd.
I'm not sure how the ownership affects the day-to-day business. To be honest, I'm not sure. That's more a question for the shareholders, I think, than for the board.
Conservative
Liberal
Nick Whalen Liberal St. John's East, NL
Mr. Chair, I'm probably going to share the last minute of my time with Madam Mendès, if I may.
Liberal
Nick Whalen Liberal St. John's East, NL
I'm not going to ask a question about Canada Post acquiring the last 9% of Purolator, because that's already not been answered, but I do have a couple of questions about the financial statements and also about expansion into foreign markets.
Mr. Bacon, when I look at the 2015 financial statements, I see that there was a large reduction in the air cargo business from about 5% of revenues the previous year to 2% of revenues the next year. I'm not sure if that was net neutral from a profit perspective, but can you walk us through that? I am wondering why that dropped, and whether that was already a type of a synergy that was found between the companies.
Chairman of the Board, Purolator Courier Ltd.
I believe the cause of that was the new air transportation arrangement that was entered into by Canada Post and Purolator with a third party, with Cargojet. Prior to that time, Purolator was the contract door and was reselling air transportation to Canada Post. That business went away by virtue of the new contract.
Liberal
Nick Whalen Liberal St. John's East, NL
Is Cargojet related in any way to Purolator? Are they a sister company or owned by the other shareholder fully, not related to Kelowna Flightcraft?
Liberal
Nick Whalen Liberal St. John's East, NL
That's great.
We look at Deutsche Post DHL and we see, my gosh, how big that organization has grown. It's now much larger than the German postal service. Do Purolator and Canada Post Group of Companies have all the pieces they need to expand international operations and to become a global player in the B-to-B and B-to-C courier market outside of Canada?
Chairman of the Board, Purolator Courier Ltd.
That's a good question.
I think a lot of the answer has to do with the intent of the government, mostly of Canada Post being the—
Liberal
Nick Whalen Liberal St. John's East, NL
Let me phrase the question another way.
We have in front of us a proposal to spend about $1.2 billion to save $400 a million a year, five years down the road, in terms of the community mailbox rollout.
If, instead, Canada Post decided to invest $1.2 billion in expanding international markets for the Purolator side of the business, would you be able to achieve an as good or better return on investment? That international expansion that worked so well in the German context does not seem to have been explored in any of the documents I've looked at. Maybe it's something that you have explored or thought about.
Chairman of the Board, Purolator Courier Ltd.
As I said previously in my remarks, we do have a subsidiary in the United States. It's a $200-million operation, roughly. The role of that business is to feed parcels into Canada. Their motto is they deliver Canada to their U.S. customers.
I once learned, when I was at IBM, that you should never fly over business. So how much do you want to go offshore when we still have lots of opportunities, I think, south of the border? I'm speaking for Purolator now. That is where we're going to focus any expansion.
The other side of that answer is that it's largely to be determined by Canada Post, that whole international expansion question.
Liberal
Nick Whalen Liberal St. John's East, NL
Do you think it has the value? Is that worth the return on investment, and also under CETA expansion into Europe for bringing Canada to Europe but also into European logistics and delivery?
Chairman of the Board, Purolator Courier Ltd.
To be honest, I don't know enough about the financial aspects of the $1.2-billion investment in community mailboxes, what the return on that is, and so on, but it seems to me that they aren't mutually exclusive. I'm just speaking personally, now.
